APC’s P5-B retail bonds get top rating

MANILA, Philippines - Debt watcher Philippine Rating Services Corp. (PhilRatings) has assigned a PRS AAA issue credit rating for the proposed retail bond issuance of Aboitiz Power Corp., the power generation arm of the Aboitiz Group.

The proposed P5 billion bonds, with an oversubscription option of another P5 billion, will be issued in two tranches, maturing in seven and 12 years.

According to PhilRatings, obligations rated PRS Aaa are of the highest quality with minimal credit risk, with the issuer having an “extremely strong” capacity to meet its financial commitment. The rating is the highest rating assigned by the debt watcher.

PhilRatings took into account the company’s sustained high levels of cash and cash flows in relation to debt service requirements, its conservative capital structure which may accommodate additional debt and is supported by healthy growth in retained earnings, diversified portfolio with good growth prospects, and experienced management team.

At the same time, PhilRatings noted that the rating also considered that despite AbotizPower’s strong profitability in relation to debt servicing in recent years, the margins of the energy sector as a whole have been fluctuating and may continue to do so moving forward.

AboitizPower said proceeds from the band issue would be used to partially finance the company’s new power generation projects, to replenish working capital, and for other general corporate purposes.

The power company has an attributable net sellable capacity 2,236 megawatts as of end-March 2014.

Its generation portfolio includes both renewable sources such as hydroelectric and geothermal, and nonrenewable sources such as coal and oil.

AboitizPower also has interests in seven distribution utilities covering 18 cities and municipalities across Central Luzon, Visayas and Mindanao.

Officials have said that the company, on its own and in cooperation with various partners, will continue to expand its generating capacity through various greenfield and brownfield projects and also through the acquisition of government-owned power facilities and contracts to increase the company’s total capacity by 2,000 MW in the next five years.